A complicated global supply chain can impact inbound transportation costs to add approximately 20-40% to the base cost of goods. International suppliers also add longer lead times which can add stress to supply chain planning. The Landed Cost Module in D365 for Finance and Supply Chain Management helps organizations to streamline their inbound shipping operations. With complete control over financial/logistical imported freight from manufacturers to warehouses, users can reduce the complexity of estimating the landed cost. D365‘s solution takes over the importing process of logistics and financing, offering timely cost estimations for overall landed costs and increased financial and logistical visibility into the supply chain.
The Landed Cost Module
The Landed cost module helps businesses streamline inbound shipping operations by giving users complete financial and logistical control over imported freight, from the manufacturer to the warehouse. For imported goods, landed costs can account for 40 percent or more of the total cost of each imported item. Therefore, the challenge is to provide accurate estimates for landed costs. Businesses can use Landed cost to complete the following tasks:
- Estimate landed costs at the time of voyage creation.
- Apportion landed costs to multiple items and purchase orders or transfer orders in a single voyage.
- Support the transfer of goods between physical locations by recognizing landed costs.
- Recognize accruals for goods in transit.
The system uses your auto cost setup to determine an estimate for your landed cost. Additionally, you can define various scenarios to deliver a more accurate estimate.
Set up Cost Templates
Cost templates establish default settings that users who get the estimate won’t necessarily know. They can help reduce complexity in the estimating process by minimizing the selections that users must specify to get an accurate estimate. If you’re using the standard cost model, you can use cost templates while you set up the cost of goods. To set up your cost templates, go to Landed cost > Costing setup > Cost templates. On the Cost templates page, the list pane on the left shows all current cost templates. You can use the buttons on the Action Pane to create, delete, and edit templates.
Create a Cost Estimate
Use the Cost estimate dialog box to generate a new cost estimate that is based on a selected cost template, a selected set of items, and other details of a journey. These settings are then used to determine the estimated landed costs of goods. These cost estimates are primarily used to work with standard cost items. By adding the estimated landed costs to the standard cost of goods in inventory, you should experience smaller variance transactions when the goods are added to a voyage because the standard cost will reflect the estimates of those landed costs. To open the Cost estimate dialog box, go to Landed cost > Periodic tasks > Cost estimate. Then set the fields that are described in the following subsections. Finally, select OK to create the estimate. The Cost estimate page (Landed cost > Inquiries > Cost estimates) then appears and shows your new estimate, as described later in this topic.
Manage Estimated Costs
To view and edit the cost estimates that you’ve created, go to Landed cost > Inquiries > Cost estimates. Here, the list pane on the left will show all your current cost estimates. You can use the buttons on the Action Pane to work with a selected estimate. Note that you can’t create a new cost estimate from the Cost estimates page. Instead, use the Cost estimate dialog box (Landed cost > Periodic tasks > Cost estimate), as described earlier.
The Cost estimates page shows how each estimated cost was derived and the estimated landed cost for each item. You can modify a cost estimate by changing the cost price and/or the currency that is associated with the various goods. You can also modify the associated voyage costs at both the voyage level and the container level. When you use this page to modify the costs, you’re prompted to recalculate the estimated costs for the items in the cost estimate. When you’re ready, you can use the estimates to update the cost price of the items in the cost template.
Next Steps
If you are interested in learning more about estimating landed cost as well as maximizing the use of Microsoft Dynamics 365 for Finance and Supply Chain Management contact us here to find out how we can help you grow your business. You can also email us at info@loganconsulting.com or call (312) 345-8817.
